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Community Reinvestment Act (CRA)In 1977, Congress passed the Community Reinvestment Act (CRA), which requires regulated financial institutions to help meet the credit needs of all communities in the service area in which they are chartered to operate. Banks are the single largest investor in the CDVC industry, accounting for more than 40 percent of all capital, and the Community Reinvestment Act (CRA) has been critical in building this investment track record. Without the CRA, many financial institutions would discontinue or drastically reduce the level of investment or services they provide to low- and moderate-income communities.
The agencies involved with CRA regulations, the Board of Governers of the Federal Reserve System, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Office of the Thrift Supervision (OTS), issued the Interagency Questions and Answers in order to resolve questions pertaining to provisions and topics of the CRA regulations. The Q&A was revised in 2001 and 2005.
CDVCA is pleased to announce the inclusion of community development venture capital companies as a qualified investment in the proposed revisions of the interagency Q&A released in the summer of 2007. Until now, CDVC funds were not specifically addressed in the definition of a qualified investment which caused an unnecessary hurdle for many bank investors in CDVCs. The changes proposed in the new document are a welcome acknowledgement of the importance of the CDVC industry and its tremendous ability to provide financial support to underserved and distressed areas.
The proposed revisions to the Interagency Q&A were released for comment. Click here to read the comments submitted to all relevant agencies regarding the revisions.
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